KP Ltd. has provided the following information: (i) Estimated monthly sales: Month ₹ in Lakh April-2024 10 May-2024 12 June-2024 15 July-2024 10…

CA Intermediate · Financial Management and Strategic Management · PYQS · January 2025
KP Ltd. has provided the following information: (i) Estimated monthly sales: Month ₹ in Lakh April-2024 10 May-2024 12 June-2024 15 July-2024 10 August-2024 13 September-2024 14 (ii) Gross Profit Ratio is 20%. (iii) Cost of Goods sold is paid in next month. (iv) Sales are in credit and credit period is allowed for 2 months. (v) Indirect Expenses are paid in the same month. Monthly indirect expenses are as follows: Month ₹ in Lakh June-2024 1.0 July-2024 1.2 August-2024 1.0 September-2024 1.3 (vi) Dividend amounting September 2024, 3 Lakh will be paid in the month of September 2024 (vii) Cash Balance on 01/07/2024 was 1.5 Lakh. (viii) The company has to maintain minimum cash balance of 1 Lakh. If there is cash balance deficit in any month, company would take a temporary short term loan and if cash balance exceed 2 Lakh, then company would invest for short term excess amount of 2 Lakh. (ix) Ignore the interest on short term loans and short term investment. You are required to prepare Cash Budget for three months starting from July 2024.

Suggested Answer and Working Notes:

Cash Budget (₹ in lakh) Particulars July August September Opening Balance 1.5 1 2 Add: Receipts Collection from debtors 12 15 10 Total cash available (A) 13.5 16 12 Less: Payments Payment of COGS 12 8 10.4 Payment of indirect exp 1.2 1 1.3 Payment of Dividend - - 3 Total payments (B) 13.2 9 14.7 Closing Balance before adjustment 0.3 7 -2.7 Minimum cash balance desired 1 1 1 Less: Temporary Investment - 5 - Add: Temporary Borrowing 0.7 - 3.7 Cash Closing Balance 1 2 1 W.N. 1 COGS payment June July Aug Sept Sales 15 10 13 14 COGS (80%) 12 8 10.4 11.2 Paid in 12 8 10.4

Topics: Part-A: Financial Management

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